TORONTO, March 14, 2024 (GLOBE NEWSWIRE) — Mattr Corp. (“Mattr” or the “Company”) (TSX: MATR) reported today its operational and financial results for the three and twelve months ended December 31, 2023. This press release should be read in conjunction with the Company’s Management Discussion and Analysis (“MD&A”) and audited consolidated financial statements for the years ended December 31, 2023 and 20221, which are available on the Company’s website and at www.sedarplus.com.
“During the fourth quarter of 2023, Mattr continued to execute on its strategy to deliver long-term growth, margin expansion and volatility reduction, completing the sale of a substantial part of our legacy pipe coating business, which concludes our strategic review process and firmly positions the Company as a harsh-environment infrastructure products provider, delivering high-value solutions to customers as they expand and renew critical infrastructure around the world,” said Mike Reeves, President & CEO of Mattr.
“In 2023, Mattr’s Continuing Operations delivered year-over-year Adjusted EBITDA growth of approximately 16%, with Adjusted EBITDA margin expanding by 140 basis points in the same period. This was accomplished while also completing a fundamental business transformation and despite unfavorable interest rates, slowing North American oilfield activity, US infrastructure permitting challenges and automotive sector labor disruption.”
Highlights include1:
- Full year Continuing Operations revenue was $925.3 million and operating income from Continuing Operations was $81.5 million. Adjusted EBITDA from Continuing Operations was $165.1 million, a 16% increase compared to $141.8 million for full year 2022. The results from 2023 included $2.6 million of one-time costs associated with the Company’s North American manufacturing footprint Modernization, Expansion and Optimization (“MEO”) program, which encompasses the Company’s growth and efficiency improvement initiatives;
- The Company completed the sale of a substantial part of its Pipeline Performance Group (“PPG”) business, reported as Discontinued Operations, to Tenaris S.A. (“Tenaris”) on November 30, 2023, for a contractual purchase price of $225 million ($166 million USD), subject to a customary working capital adjustment, concluding the Company’s strategic review process. The Company currently anticipates receiving aggregate net cash proceeds of approximately $278.5 million, consisting of the cash provided to the Company by operating activities from Discontinued Operations between signing and closing of this transaction, plus the contractual purchase price, net of its aggregate transaction fees and expenses and the currently estimated working capital adjustment. The Company expects the parties to finalize the net working capital adjustment during the second quarter of 2024;
- As at December 31, 2023, the Company had total net cash of $334.1 million and a Net Debt-to-Adjusted EBITDA2 ratio (using a trailing twelve-month consolidated Adjusted EBITDA2) of approximately (0.26) times;
- For the full year ended December 31, 2023, Consolidated Net Income was $87.2 million, Consolidated Adjusted EBITDA was $388.0 million, fully diluted Consolidated EPS was $1.25 and fully diluted Adjusted Consolidated EPS was $3.43;
- Fourth quarter revenue generated by Continuing Operations was $210.8 million and fourth quarter operating income from Continuing Operations was $2.3 million. Fourth quarter Adjusted EBITDA from Continuing Operations was $32.8 million, a 21% decrease compared to fourth quarter of 2022. Fourth quarter 2023 results included $1.7 million of one-time costs associated with the Company’s MEO program and a non-cash impairment charge of $18.5 million associated with a production facility closure as discussed in further detail below;
- Composite Technologies segment fourth quarter revenue decreased by 19% to $112.5 million compared to $139.6 million in the prior year’s quarter. Fourth quarter Adjusted EBITDA for the Composite Technologies segment was $18.8 million, which included $1.5 million of one-time costs associated with the Company’s MEO program, decreased by 31% from prior year’s fourth quarter;
- Subsequent to the end of the fourth quarter of 2023, and consistent with its MEO program, the Composite Technologies segment discontinued the production of fiberglass reinforced plastic (“FRP”) tanks within its Anaheim, California facility and took steps to exit the site, which is expected to be complete by year end. Once completed, this action is expected to lower annualized segment fixed costs in its Composite Technologies segment by approximately $2.5 million, elevate overall production footprint efficiency and substantially lower its exposure to potential environmental, employment and other regulatory risks associated with business operations within the State of California. This action is not expected to alter previously shared revenue growth potential and related returns expectations tied to the segment’s MEO program. Consequently, the Company has reported a related non-cash impairment charge of $18.5 million during the fourth quarter of 2023 and expects to report a related non-recurring charge during the first quarter of 2024;
- Connection Technologies segment fourth quarter revenue increased by 4% to $79.0 million compared to $76.0 million in the prior year’s quarter. Fourth quarter Adjusted EBITDA for the Connection Technologies segment was $14.7 million, which included $0.2 million of one-time costs associated with the Company’s MEO program, was relatively flat compared to the fourth quarter of prior year;
- For the fourth quarter, Discontinued Operations generated revenue of $265.1 million, operating income of $105.4 million and Adjusted EBITDA of $104.9 million;
- On a total consolidated basis (consisting of both Continuing Operations and Discontinued Operations), for the fourth quarter Mattr reported Net Loss of $23.0 million, Adjusted EBITDA (“Consolidated Adjusted EBITDA”) of $137.7 million, fully diluted Earnings (Losses) Per Share (“Consolidated EPS”) of $(0.34) and fully diluted Adjusted Consolidated EPS of $1.51 during the fourth quarter;
- The Company generated $101.4 million in cash in the fourth quarter from operating activities from Continuing Operations and Discontinued Operations on a consolidated basis (“Consolidated Total Operating Activities”), compared to $163.0 million of cash generated from Consolidated Total Operating Activities during the fourth quarter of 2022, while investing approximately $19 million under the 2023 portion of its previously announced capital investment program to support longer-term growth in its Composite and Connection Technologies segments;
- A net repayment of $30.0 million was made on the Credit Facility (as defined herein) bringing the outstanding balance to zero;
- The Company remained active under its normal course issuer bid (“NCIB”) repurchasing 2.9 million of its common shares during the fourth quarter for an aggregate repurchase price of $41.9 million and completing the maximum number of repurchases of common shares permitted under its current NCIB, which is eligible for renewal starting in June 2024; and
- Subsequent to the end of the fourth quarter of 2023, the Company was renamed to Mattr Corp. and changed its US OTC ticker symbol from SAWLF to MTTRF.
1The Company’s consolidated financial statements for the year ended December 31, 2023, report Continuing Operations as the Company’s Composite Technologies and Connection Technologies reporting segments and Discontinued Operations as the Company’s PPS reporting segment. Total consolidated figures include figures from both Continuing Operations and Discontinued Operations.
2Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS are non-GAAP measures. Non-GAAP measures do not have standardized meanings prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 5.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these non-GAAP measures.
Mr. Reeves continued, “Each of our continuing operating segments achieved new record annual revenue and annual Adjusted EBITDA results for 2023. Connection Technologies delivered its largest ever premium wire and cable order and significantly expanded its US infrastructure market participation, while Composite Technologies increased fuel storage tank revenue by over 7%, reached a new annual water products revenue record and saw larger diameter Flexpipe® product revenue rise by nearly 70% versus the prior year. In parallel, the Company repurchased over 4.4 million shares during 2023 and deployed nearly $76.3 million of organic growth capital, with four substantial, high return, North American production facility additions remaining on-time, on-budget and scheduled for first production between mid-2024 and early 2025. In these last twelve months the employees of Mattr have achieved a long list of extraordinary outcomes and have done so while setting a new safety performance record. I could not be prouder of this organization and the many talented, creative and committed people who work here.”
“During the fourth quarter of 2023, our ongoing actions to lower fixed costs and enhance production efficiency enabled Continuing Operations to maintain Adjusted EBITDA margins1 in excess of 15%, as Connection Technologies delivered year-over-year revenue growth, partially offsetting the previously anticipated impacts of lower North American onshore oilfield activity and temporarily reduced fuel tank production and shipment activity, both of which weighed on our Composite Technologies segment.”
“Notwithstanding its sale at the end of November, our Discontinued Operations delivered substantial revenue growth, both year-over-year and on a sequential basis, driven by continued strong operational execution on the Southeast Gateway Pipeline (“SGP”) project and around the world, a testament to the capabilities and professionalism of the entire pipe coating organization.”
Mr. Reeves concluded, “Entering 2024, normal seasonality combined with flat early-year North American oilfield activity is anticipated to cause Adjusted EBITDA in the first quarter of the year to be modestly below the fourth quarter of 2023, before an expected significant upwards shift in the second quarter of 2024.”
“Our businesses serve large and growing end markets, we have a robust balance sheet, significant opportunities for investment in high return organic growth and the capacity to seek and complete meaningful, accretive acquisitions. Consequently, management believes Mattr is well positioned to deliver substantial value creation for shareholders over the coming years. While we will be impacted by one-time costs tied to our North American production footprint MEO activities during 2024, we believe that full year 2024 revenue and underlying profitability will be higher than 2023, and that our Company is poised to meet our stated growth, profitability and free-cash-flow conversion objectives in the years that follow.”
| Selected Financial Highlights | ||||||||||||
| (in thousands of Canadian dollars, except per share amounts and percentages) | Three Months Ended | Year Ended | ||||||||||
| December 31 | December 31 | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| $ | % | $ | % | $ | % | $ | % | |||||
| Revenue | 210,767 | 225,751 | 925,271 | 861,786 | ||||||||
| Gross profit | 65,873 | 31% | 69,551 | 31% | 296,439 | 32% | 258,230 | 30% | ||||
| Income from Continuing Operations(a) | 2,319 | 1% | 12,383 | 5% | 81,542 | 9% | 110,971 | 13% | ||||
| Net Income from Continuing Operations | 2,336 | 13,489 | 55,859 | 93,347 | ||||||||
| Net (Loss) Income from Discontinued Operations | (25,342 | ) | (80,299 | ) | 31,360 | (124,323 | ) | |||||
| Net (Loss) Income for the period | (23,006 | ) | (66,810 | ) | 87,219 | (30,976 | ) | |||||
| (Loss) Earnings per share: | ||||||||||||
| Basic | (0.34 |
) |
(0.94 | ) | 1.26 | (0.43 | ) | |||||
| Diluted | (0.34 | ) | (0.94 | ) | 1.25 | (0.43 | ) | |||||
| Adjusted EBITDA from Continuing Operations (b) (c) |
32,787 | 16% | 41,413 | 18% | 165,078 | 18% | 141,823 | 16% | ||||
| Adjusted EBITDA from Discontinued Operations(b) (c) | 104,933 | 40% | 15,044 | 13% | 222,884 | 27% | 9,910 | 3% | ||||
| Total Adjusted EBITDA from Operations (b) (c) | 137,720 | 29% | 56,457 | 16% | 387,962 | 22% | 151,733 | 12% | ||||
| Total Adjusted EPS from Operations: (b) | ||||||||||||
| Basic | 1.52 | 0.44 | 3.46 | 1.01 | ||||||||
| Diluted | 1.51 | 0.43 | 3.43 | 1.01 | ||||||||
| (a) | Operating income for the three months ended December 31, 2023, includes $18.5 million impairment charges, $1.7 million gain on sale of land and other and $2.5 million restructuring costs and other, net; while operating income for the three months ended December 31, 2022, includes no gain on sale of land and other, $2.2 million in impairment charges and $4.1 million in restructuring costs and other, net. Operating income for the year ended December 31, 2023, includes impairment charges of $27.2 million, $1.7 million gain on sale of land and other and $2.5 million restructuring costs and other, net; while operating income for the year ended December 31, 2022, includes $43.0 million in gain on sale of land and other, $9.5 million in impairment charges and $9.7 million in restructuring costs and other, net. | |||||||||||
| (b) | Adjusted EBITDA and Adjusted EPS are non-GAAP measures. Non-GAAP measures do not have standardized meanings prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 5.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these non-GAAP measures. | |||||||||||
| (c) | Adjusted EBITDA is adjusted for all periods presented as the Company updated this non-GAAP measure in the first quarter of 2023 to include adjustments for share-based incentive compensation cost and foreign exchange (gain) loss. See Section 5.0 – Reconciliation of Non-GAAP Measures for further details on the changes in the composition in Adjusted EBITDA. The amounts presented above reflect restated figures for all prior periods to align with the current presentation. | |||||||||||
1.0 FOURTH QUARTER HIGHLIGHTS
The fourth quarter of 2023 saw the Company’s Composite Technologies segment revenue and Adjusted EBITDA decrease compared to the same quarter of 2022, as the segment navigated sequentially lower average North American oilfield activity, normal seasonal slowing of underground storage tank installation activity and the first of two quarters of lowered underground fuel tank production in response to transient customer permitting challenges encountered earlier in 2023. The segment also sold its Oilfield Asset Management (“OAM”) business during Q4 2022 and therefore the Q4 2023 results did not reflect any contributions from the OAM business line.
In parallel, the Company’s Connection Technologies segment delivered fourth quarter revenue and Adjusted EBITDA similar to the same quarter of 2022, with sales growth in North American infrastructure markets offsetting continued slowness in the Canadian distribution sector and US automotive labor disruption effects.
The Company delivered operating income from Continuing Operations of $2.3 million and Adjusted EBITDA1 from Continuing Operations of $32.8 million in the fourth quarter of 2023, a decrease of $10.1 million and $8.6 million, respectively, compared to the fourth quarter of 2022. Operating income from Continuing Operations in the fourth quarter included impairment charges of $18.5 million booked in connection with the closure of the Xerxes®’ Anaheim manufacturing facility and restructuring costs of $2.5 million, whereas the comparable period for the prior year included $2.1 million of impairment charges and $4.1 million of restructuring costs. Additionally, share-based incentive compensation of $2.1 million was recorded against operating income from Continuing Operations during the fourth quarter of 2023, while operating income from Continuing Operations in the prior year’s fourth quarter included a $12.9 million share-based incentive compensation expense.
The Company continued to execute on its portfolio optimization strategy during the fourth quarter. On November 30, 2023, the Company completed the sale of its PPG pipe coating business to Tenaris. The Company has received gross proceeds of $241.2 million (USD $177.6 million) which include the agreed-upon purchase price of $225.4 million (USD$166 million) and initial working capital adjustments. The final net cash proceeds received by the Company in satisfaction of the contractual purchase price for the sale of the PPG business remains subject to completion of a customary final true up of the estimated working capital calculation as provided in the definitive purchase and sale agreement in respect of the transaction. The Company expects the parties to finalize the net working capital adjustment during the second quarter of 2024 and the Company currently anticipates its net cash outflow to settle the working capital adjustment will be approximately $32.0 million. The completion of this transaction concludes the Company’s previously announced strategic review and portfolio transformation process.
As at December 31, 2023, the Company had cash and cash equivalents totaling $334.1 million, an increase from the $98.0 million as at September 30, 2023 (December 31, 2022 – $264.0 million). The increase in cash compared to the third quarter of 2023 was largely attributable to $241.2 million of gross sale proceeds received from the sale of PPG and $101.4 million of cash provided by consolidated operating activities (including Discontinued Operations). This was offset by (i) repayment of $30.0 million of the Company’s syndicated credit facility (the “Credit Facility”), (ii) an aggregate of $41 million of share acquisitions under the Company’s NCIB in the fourth quarter of 2023, (iii) $18.8 million of growth and maintenance capital expenditures for its Continuing Operations and (iv) $6.6 million spent on repayment of lease liabilities during the fourth quarter of 2023. Since the beginning of 2021 and up to December 31, 2023, the Company has repaid $291.5 million against the Credit Facility. The Company will continue to focus on maximizing the conversion of operating income into cash, optimizing its capital structure, investing in organic and inorganic growth opportunities, and enhancing shareholder value.
1EBITDA, Adjusted EBITDA, Adjusted EPS, and net debt-to-Adjusted EBITDA are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See “Section 5.0 – Reconciliation of Non-GAAP Measures” for further details and a reconciliation of these non-GAAP measures. Adjusted EBITDA is adjusted for all periods presented as the Company updated this non-GAAP measure to include adjustments for share-based incentive compensation cost and foreign exchange (gain) loss. See “Section 5.0 – Reconciliation of Non-GAAP Measures” for further details on the changes in composition of Adjusted EBITDA. The amounts presented above reflect restated figures for all prior periods to align with the current presentation. The Company expects the current calculation methodology of Adjusted EBITDA to be consistently applied in future periods.
| Selected Segment Financial Highlights | |||||||||||||||||
| (in thousands of Canadian dollars, except percentages) | Three Months Ended | Year Ended | |||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| 2023 |
2022 | 2023 |
2022 | ||||||||||||||
| $ | % | $ | % | $ | % | $ | % | ||||||||||
| Revenue | |||||||||||||||||
| Composite Technologies | 112,489 | 139,599 | 535,549 | 529,151 | |||||||||||||
| Connection Technologies | 78,982 | 76,053 | 344,980 | 315,245 | |||||||||||||
| Financial, Corporate, and Others | 19,296 | 10,099 | 44,742 | 17,390 | |||||||||||||
| Revenue from Continuing Operations | 210,767 | 225,751 | 925,271 | 861,786 | |||||||||||||
| Revenue from Discontinued Operations | 265,125 | 119,707 | 829,641 | 393,503 | |||||||||||||
| Operating (loss) income | |||||||||||||||||
| Composite Technologies | (4,369 | ) | (3.9 | %) | 15,205 | 10.9 | % | 67,416 | 12.6 | % | 53,346 | 10.1 | % | ||||
| Connection Technologies | 11,795 | 14.9 | % | 11,594 | 15.2 | % | 60,356 | 17.5 | % | 55,237 | 17.5 | % | |||||
| Financial and Corporate | (5,103 | ) | (14,424 | ) | (46,230 | ) | 2,388 | ||||||||||
| Operating income from Continuing Operations | 2,319 | 12,383 | 81,542 | 110,971 | |||||||||||||
| Operating Income (loss) from Discontinued Operations | 105,356 | 39.7 | % | (1,352 | ) | (1.1 | %) | 196,271 | 23.7 | % | (42,019 | ) | (10.7 | %) | |||
| Adjusted EBITDA | |||||||||||||||||
| Composite Technologies | 18,837 | 16.7 | % | 27,343 | 19.6 | % | 112,821 | 21.1 | % | 97,687 | 18.5 | % | |||||
| Connection Technologies | 14,699 | 18.6 | % | 14,512 | 19.1 | % | 69,504 | 20.1 | % | 62,745 | 19.9 | % | |||||
| Financial and Corporate | (749 | ) | (442 | ) | (17,247 | ) | (18,609 | ) | |||||||||
| Adjusted EBITDA from Continuing Operations (a) | 32,787 | 15.6 | % | 41,413 | 18.3 | % | 165,078 | 17.8 | % | 141,823 | 16.5 | % | |||||
| Adjusted EBITDA from Discontinued Operations (a) | 104,933 | 39.6 | % | 15,044 | 12.6 | % | 222,884 | 26.9 | % | 9,910 | 2.5 | % | |||||
| (a) | Adjusted EBITDA is a non-GAAP measure. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 5.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these non-GAAP measures. Adjusted EBITDA is adjusted for all periods presented as the Company updated this non-GAAP measure in the first quarter of 2023 to include adjustments for share-based incentive compensation cost and foreign exchange (gain) loss. See Section 5.0 – Reconciliation of Non-GAAP Measures for further details on the changes in composition for Adjusted EBITDA. The amounts presented above reflect restated figures for all prior periods to align with the current presentation. | ||||||||||||||||
Composite Technologies segment revenue in the fourth quarter of 2023 was $112.5 million, a decrease of $27.1 million, or 19.4%, compared to the fourth quarter of 2022. Operating loss in the fourth quarter of 2023 was $4.4 million compared to operating income of $15.2 million in the fourth quarter of 2022. The segment’s 2023 fourth quarter results included air permit and equipment non-cash impairment charges of $18.5 million booked in connection with the closure of the Xerxes®’ Anaheim manufacturing facility. Excluding impacts from the OAM business (which was sold in November 2022 and generated no revenue or operating income in the fourth quarter of 2023 compared to revenue of $6.2 million and operating income of $0.2 million in the comparative period), the impact of the previously discussed impairment charge and the impact of $1.5 million in MEO costs associated with the establishment of the segment’s two new North American production sites during the period (no MEO costs were incurred during the prior year period), the segment’s revenue decreased by $21 million and the operating income increased by $0.6 million.
Excluding the impacts discussed above, the decrease in revenue was mostly attributable to lower demand for the Company’s Flexpipe® product line due to lower drilling and completion activity levels by North American oil and gas operators, and lower production and shipment of FRP tanks due to normal seasonal slowing in project execution compounded by the lingering impact of customer permitting delays experienced earlier in 2023. Despite these revenue reducing factors, the segment continued to optimize its cost base and delivered growth over the comparable period in sales of its large diameter Flexpipe® products and established a new quarterly revenue record for its Xerxes® stormwater product line. Adjusted EBITDA1 in the fourth quarter of 2023 was $18.8 million, a decrease of $8.5 million compared to $27.3 million in the fourth quarter of 2022.
The Connection Technologies segment delivered revenue of $79 million in the fourth quarter of 2023 which was an increase of $2.9 million compared to the fourth quarter of 2022. This was primarily driven by an increase in wire and cable product shipments into infrastructure applications in North America. Its operating income in the fourth quarter of 2023 was $11.8 million, a modest increase from $11.6 million reported in the prior year period. The segment incurred MEO costs of approximately $0.2 million associated with the relocation of its North American footprint during the quarter. The segment delivered Adjusted EBITDA1 of $14.7 million during the fourth quarter of 2023, a 1.2% increase versus the prior year quarter.
Discontinued Operations, which consists of the businesses formerly reported under the PPS segment (excluding the entities not within the perimeter of the transaction with Tenaris), generated revenue of $265.1 million in the fourth quarter of 2023, representing an increase of 121.5% versus the same quarter of 2022. Operating income in the fourth quarter of 2023 was $105.4 million which represented an increase of $106.7 million versus the fourth quarter of 2022 operating loss of $1.4 million. This significant increase was a result of strong performance in pipe coating facilities across all regions, bolstered by 2 full months of coating activity within the SGP project. Discontinued Operations generated $104.9 million of Adjusted EBITDA1 in the fourth quarter of 2023, a substantial increase from the $15 million reported in the prior year’s fourth quarter. Execution efficiency and favourable revenue mix resulted in Adjusted EBITDA margins1 of 39.6% during the quarter, compared to a 12.6% Adjusted EBITDA margin1 in the prior year’s fourth quarter.
The Company has recognized a $105.0 million loss on the sale of PPG to Tenaris in Discontinued Operations in the consolidated statements of income (loss). The loss includes a non-cash Cumulative Translation Adjustment of $13.0 million that reflects the impact of foreign exchange rate fluctuations on the sold business.
The PPG business, which has historically comprised the vast majority of the Company’s bid and budgetary estimates and total order backlog, was sold in November 2023 and as a result the Company will no longer report these supplementary financial measures as the Company does not believe that going forward such measures will provide investors with useful information to understand or evaluate the Company’s Continuing Operations or its respective performance and prospects.
2.0 OUTLOOK
The Company expects to experience a modest sequential increase in consolidated revenue within its Continuing Operations during the first quarter of 2024, driven by broadly higher activity levels in its Connection Technologies segment and higher sales of composite pipe products into international markets within the Composite Technologies segment, partially offset by lower production and shipment of FRP tanks and lower pipe coating activity within its Brazilian operations.
The Composite Technologies segment’s first quarter revenue outlook is primarily driven by expectations that North American onshore drilling and completion activity levels, and therefore North American demand for Flexpipe® products, will be similar to those observed during the fourth quarter of 2023, while shipments of Flexpipe® products to support international projects will move sequentially up. This is coupled with the normal seasonal low point for FRP tank installation activity as unfavorable weather and ground conditions are experienced across much of North America. The first quarter of 2024 is also anticipated to see the segment continue to limit FRP tank production activity to control customer-owned inventory levels which elevated over the course of 2023 in the face of permitting delay issues faced by some North American customers. This is the last quarter in which the Company anticipates this action will be necessary, as most customers have adapted their permit application strategies and are indicating greater confidence that permits will be available for projects in 2024 and beyond.
First quarter revenue outlook within the Connection Technologies segment is primarily driven by expected sequential strengthening of demand within North American industrial and infrastructure markets.
Despite an expectation of modest favorable movement in revenue generation in the first quarter of 2024, the Company anticipates some margin compression as a result of its MEO activities and the specific mix of product sales.
During the second quarter of 2023, the Company detailed several planned 2023 and 2024 capital investments into high-return growth and efficiency improvement opportunities in both segments. These investments and other MEO activities, which are currently progressing on time and on budget, include:
- The addition of two new manufacturing facilities and elimination of one aging manufacturing facility within its Composite Technologies network, namely:
- a new Xerxes® FRP tank production site in Blythewood, South Carolina that is expected to commence production in mid-2024; and
- a new Flexpipe® composite pipe production site in Rockwall, Texas that is expected to commence production in mid-2024; and
- the shut-down and exit of a Xerxes® FRP tank production site in Anaheim, California that is expected to be largely complete by the end of 2024.
- The replacement of its Rexdale, Canada facility and expansion of its Connection Technologies’ North American manufacturing footprint via:
- a new heat-shrink tubing production site in Fairfield, Ohio that is expected to commence production in late 2024; and
- a new wire and cable production site in Vaughan, Ontario that is expected to commence production in late 2024.
The Company expects to continue to make sizeable organic investments throughout 2024 to modernize, expand capacity in targeted geographies and improve efficiency within the North American production network of its Composite Technologies and Connection Technologies segments. Given the anticipated timing of these MEO actions, the Company continues to expect to recognize meaningful MEO costs throughout 2024, with these costs weighted towards optimization and growth activities within the Composite Technologies segment during the first half of 2024 and weighted towards the modernization and growth activities within the Connection Technologies segment during the second half of 2024. In aggregate, once completed, these planned investments are expected to result in the Company creating at least $150 million per year of incremental revenue generating capacity with comparable margins to those realized in its Composite Technologies and Connection Technologies segments. These levels of output are expected to be realized over the 3–5 year period following completion, as the facilities reach efficient utilization levels in accordance with their currently expected timelines. The Company does not expect the recently announced shut-down of the Xerxes production site in Anaheim, California, to alter the output expectations.
In management’s view, the underlying mid and long-term market trends for all of Mattr’s core businesses remain favourable. Despite elevated interest rates, demand for products in support of critical infrastructure renewal and expansion is expected to remain robust; its fuel tank customers have made adjustments to accommodate elongated permitting timelines which are anticipated to result in a return to more normal FRP tank shipment patterns during the second quarter of 2024; and anticipated stable oil and gas commodity prices combined with a new annual capital spending cycle for North American oil and gas producers is expected to provide opportunities for market share gains by the Company’s Flexpipe® business, particularly within its recently commercialized larger diameter product portfolio, moving through the year. More broadly, management expects that demand for its differentiated products designed to withstand harsh environments will continue to rise in the coming years as a result of the global need to renew and expand critical infrastructure, including energy generation and distribution, electrification, transportation network enhancement and storm water management. The Company continues to closely monitor raw material and labour costs and accordingly, will continue to ensure its pricing appropriately reflects the value of its products and its cost inputs.
The Company continues to take an “all of the above” approach to capital allocation, skewed towards investment in organic and inorganic acquisition and investment opportunities viewed as having the highest risk-adjusted return on investment potential. With substantial capacity to deploy capital and the expectation to deploy available capital over the next several quarters, the Company continues to elevate focus on inorganic opportunities, including opportunities of meaningful scale, particularly related to differentiated wire & cable sectors and water products, where long-term tailwinds are expected. The Company remains focused on ensuring any capital investments provide superior returns (both near and long-term) to shareholders in light of all available options, including the return of capital to shareholders. We expect to apply to renew our NCIB and continue to repurchase the Company’s common shares on an opportunistic basis. Opportunities also exist to further enhance the Company’s organic growth trajectory.
1EBITDA, Adjusted EBITDA, adjusted EBITDA margins and net debt-to-Adjusted EBITDA are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See “Section 5.0 – Reconciliation of Non-GAAP Measures” for further details and a reconciliation of these non-GAAP measures. Adjusted EBITDA is adjusted for all periods presented as the Company updated this non-GAAP measure in the first quarter of 2023 to include adjustments for share-based incentive compensation cost and foreign exchange (gain) loss. See “Section 5.0 – Reconciliation of Non-GAAP Measures” for further details on the changes in composition of Adjusted EBITDA. The amounts presented above reflect restated figures for all prior periods to align with the current presentation. The Company expects the current calculation methodology of Adjusted EBITDA to be consistently applied in future periods.
Composite Technologies Segment
While the Company anticipates continued year-over-year expansion of its stormwater products business, Composite Technologies segment performance in the first half of 2024 will largely be driven by three factors: production and shipment of FRP tanks into North American fuel station applications; baseline volumes of Flexpipe® product consumption driven by North American oilfield activity levels; and continued market share gains by the Company’s larger diameter Flexpipe® products in North America and internationally.
Production and shipment of Xerxes® FRP tanks will be at their seasonal low point during the first quarter, as weather and ground conditions across much of North America remain largely unfavorable to fuel station construction activities, before normal seasonal construction activity rises in the second quarter of 2024. The first quarter of 2024 is also anticipated to see the segment continue to limit FRP tank production activity to control customer owned FRP tank inventory levels, which elevated over the course of 2023 in the face of permitting delay issues faced by some North American customers. This is the last quarter in which the Company anticipates this action will be necessary, as most customers have adapted their permit application strategies and are indicating greater confidence that permits will be available for projects in 2024 and beyond. Consequently, the Company anticipates a substantial increase in FRP tank production and shipments in the second quarter of 2024, and currently expects full year 2024 Xerxes® revenues to expand compared to 2023.
The Company anticipates North American onshore oil and gas drilling and completion activity will remain relatively flat throughout the first half of 2024, as generally stable commodity prices and the favorable impact of new calendar year customer capital budgets are offset by broad, large-scale, customer consolidation events which typically result in temporarily lower activity levels within the impacted organizations. Normal seasonality effects are expected to occur, with robust first quarter Canadian oilfield activity anticipated to move lower in the second quarter of 2024, due to weather and ground conditions, while US completion activity is anticipated to move higher in the second quarter, as weather and ground conditions become more favorable. The Company currently anticipates a substantial increase in North American Flexpipe® revenue moving from the first quarter to the second quarter of 2024, as continued adoption of its recently commercialized larger diameter products enhance normal seasonal cycles.
Overlaying North American oilfield trends, the Company has been successful in securing multiple Flexpipe® orders, including larger diameter product orders, for delivery into international projects during the first half of 2024, and expects these deliveries to enhance first quarter and, more substantially, second quarter performance. The Company currently anticipates full year 2024 Flexpipe® revenues to expand compared to 2023.
The segment continues to execute the establishment of two new US production sites, with its Rockwall, Texas Flexpipe® and Blythewood, South Carolina Xerxes® facilities progressing on-time and on-budget. First production is expected from both sites during the third quarter of 2024. In addition, the segment has taken steps to lower its fixed cost and operating risk base by ceasing production of FRP tanks from its aging Anaheim, California facility, and will fully exit the site by year end. In combination, the actions taken to modernize, expand and optimize the segment’s North American production footprint are expected to lower average production costs, increase total production capacity and position the segment to deliver meaningful growth and margin expansion in subsequent years. The Company continues to expect MEO costs will lower segment EBITDA margins during the first half of 2024. The Company expects that there will be sufficient incremental revenues from these new facilities to absorb incremental fixed costs during the ramp up periods, and both new facilities have sufficient physical space to enable further production line additions in future years. The segment continues to closely monitor raw material and labour costs and, as a result, will continue to ensure its pricing appropriately reflects the value of its products and its cost inputs.
Connection Technologies Segment
The Company is expecting demand for its Connection Technologies segment products to rise in the first quarter of 2024 to levels similar to those observed in the prior year’s quarter, despite the non-recurrence of a large aerospace wire and cable order which favorably impacted Q1-2023 results, before moving further upwards in the second quarter of 2024. Profitability in the first and second quarters is expected to be modestly impacted by one-time costs associated with the Company’s MEO activities, although the majority of MEO costs for the segment are expected to be recognized during the second half of 2024.
The Company continues to monitor recessionary concerns and broad supply chain impacts. Its outlook does not incorporate any expectation of meaningful growth in total global vehicle output within the automotive end markets, which represented approximately 29% of the segment’s revenue in the fourth quarter of 2023. The Company does not anticipate any material impact from the continuing stabilization of EV demand and production. Despite the macroeconomic backdrop, demand for the Company’s automotive products is expected to continue to outpace overall automotive production as a result of electronic content growth in premium, hybrid and full electric vehicle markets, particularly in the Asia Pacific and Europe, Middle East and Africa regions. The Company is expecting to benefit from continued infrastructure spending in 2024 and beyond as new and upgraded utility and communication networks are constructed, nuclear refurbishments continue in Canada, and federal stimulus package impacts persist. The segment continues to execute the establishment of two new production sites, with its Vaughan, Ontario and Fairfield, Ohio facilities progressing on-time and on-budget. First production from both sites is expected during the second half of 2024. The Company expects that there will be sufficient incremental revenues from these new facilities to absorb incremental fixed costs during the ramp up periods, and both new facilities have sufficient physical space to enable further production line additions in future years. The segment continues to closely monitor raw material and labour costs, particularly copper, and, as a result, will continue to ensure its pricing appropriately reflects the value of its products and its cost inputs.
Strategic Review Update
On November 30, 2023, the Company completed the sale of its PPG operating unit, a substantial part of its legacy pipe coating business, which concluded its strategic review process that was initially announced on September 12, 2022 (the “Strategic Review”) to review strategic alternatives for its PPG, SPS, and OAM operating units.
Pursuant to the Strategic Review, the Company considered and explored a range of options for each of these operating units, including the sale of such units. To date, the Strategic Review process (including the sale of a non-material business unit preceding the formal launch of the Strategic Review) has resulted in the successful completion of the following:
- the sale of its Lake Superior Consulting business (which formed part of what was previously the PPS segment) in September 2022;
- the sale of its OAM business (which formed part of the Composite Technologies segment) in November 2022;
- the sale of its Socotherm subsidiary (which formed part of what was previously the PPS segment) in December 2022;
- the sale of its specialty pipe coating facility in Ellon, Scotland (which formed part of what was previously the PPS segment) in the second quarter of 2023;
- the sale of its SPS business (which formed part of what was previously the PPS segment) at the end of May 2023;
- the sale of its facility in Pozzallo, Italy (which formed part of what was previously the PPS segment) in fourth quarter of 2023;
- the sale of one of its real estate assets in western Canada; and
- the sale of the substantial majority of its PPG operating unit (which formed the majority of what was previously the PPS segment), at the end of November 2023.
In connection with the Strategic Review, the Company announced its official re-brand to “Mattr” in June 2023, and then completed its legal name change from “Shawcor Ltd” to “Mattr Corp” in January 2024, reflecting its transformation from an energy services organization to a material technologies company providing differentiated, high-performance products to critical infrastructure markets around the world.
During the fourth quarter and prior to the completion of its sale to Tenaris in November of 2023, the PPG business generated significant revenue, Adjusted EBITDA and cash from operating activities for the Company. The Company benefitted from this significant generation of cash, but consequently this has resulted in the incurrence of related income tax and other liabilities for the PPG business which will require settlement with Tenaris as part of a customary working capital adjustment process. As such, the final net cash proceeds received by the Company in satisfaction of the contractual purchase price for the sale of the PPG business remains subject to completion of a customary final true up of the estimated working capital calculation as provided in the definitive purchase and sale agreement in respect of the transaction. The Company expects the parties to finalize the net working capital adjustment during the second quarter of 2024 and the Company currently anticipates its net cash outflow to settle the working capital adjustment will be approximately $32.0 million.
The Company continues to explore options to divest of its Brazilian pipe coating operations (“Thermotite”), formerly part of the PPG operating unit, which was excluded from the perimeter of the transaction completed in November of 2023. While the Company does not anticipate Thermotite’s financial results to be material to the organization, the business is fully booked throughout 2024 and is expected to deliver increased full year 2024 financial performance when compared to 2023. The Company remains committed to divest of this entity and considers its Strategic Review to be substantially complete.
3.0 CONFERENCE CALL AND ADDITIONAL INFORMATION
Mattr will be hosting a Shareholder and Analyst Conference Call and Webcast on Thursday, March 14th, 2024 at 9:00 AM ET, which will discuss the Company’s Fourth Quarter 2023 Financial Results. To participate via telephone, please register at https://register.vevent.com/register/BI7d6d639108f6417e87ebf3c247fc115e and a telephone number and pin will be provided.
Alternatively, please go to the following website address to participate via webcast: https://edge.media-server.com/mmc/p/66rbwdc2 . The webcast recording will be available within 24 hours of the live presentation and will be accessible for 90 days.
About Mattr
Mattr is a growth-oriented, global materials technology company broadly serving critical infrastructure markets, including transportation, communication, water management, energy and electrification. The Company operates through a network of fixed manufacturing facilities. Its two business segments, Composite Technologies and Connection Technologies, enable responsible renewal and enhancement of critical infrastructure while lowering risk and environmental impact.
For further information, please contact:
Meghan MacEachern
Director, External Communications & ESG
Tel: 437-341-1848
Email: [email protected]
Website: www.mattr.com
Source: Mattr Corp.
Mattr.ER
4.0 FORWARD-LOOKING INFORMATION
This news release includes certain statements that reflect management’s expectations and objectives for the Company’s future performance, opportunities and growth, which statements constitute “forward-looking information” and “forward-looking statements” (collectively “forward-looking information”) under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward-looking information involves estimates, assumptions, judgements and uncertainties. These statements may be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “anticipate”, “expect”, “believe”, “predict”, “estimate”, “continue”, “intend”, “plan” and variations of these words or other similar expressions. Specifically, this news release includes forward-looking information in the Outlook Section and elsewhere in respect of, among other things, the ability of the Company to deliver higher returns to all shareholders; the market dynamics during 2024; the favourability of underlying business trends of the Company; the Company’s ability to execute on its portfolio optimization strategy; the Company’s ability to execute projects under contract; the Company’s ability to execute on its business plan and strategies, including the pursuit, execution and integration of potential organic and inorganic growth opportunities, as applicable; the timing of the finalization of the net working capital adjustment for the sale of the PPG business; the anticipated net cash outflow amount to settle the working capital adjustment for the sale of the PPG business; the level of financial performance throughout 2024; expected increased revenue within Continuing Operations in the first quarter of 2024; the gradual increase in demand for oilfield products in the first half of 2024; the demand for, and activity in, the Company’s products in the Composite Technologies and the Connection Technologies segments of the Company’s business; the Company’s investments throughout 2024 to expand capacity within the Composite Technologies and Connection Technologies segments; North American onshore drilling and completion activity; the continued permitting delay impacts on fuel storage tank shipments; the anticipated results and timing of the Company’s capital expenditures investments and the expected impact on the Company’s revenue generating capacity, operational efficiencies, margin profile enhancement, and financial results; increased shipments of Flexpipe® products; FRP tank production activity; the end to delays faced by North American customers due to permit application strategies; availability for permits for projects in 2024 and beyond; the impact of MEO activities on the Company’s financial performance; the impact of MEO costs on financial measures in the first half of 2024; timing for completion of new facilities, and timing of achievement of anticipated production levels; the seasonal impacts to, and demand in, the Company’s Composite Technologies and Connection Technologies segments; the impact of increased normal seasonality and stable North American oilfield activity in the first quarter of 2024; the anticipated normalized product shipment patterns during the second quarter of 2024; the anticipated demand for the Company’s Flexpipe® product line; the growth in premium, hybrid and full electric vehicle markets and the impact thereof on the Company’s financial performance; the impact of continued infrastructure spending, including in the areas of water management, communication networks and nuclear refurbishment on the Company’s financial performance; the Company’s management of raw material and labour costs; the impact of global economic activity on the demand for the Company’s products; the level, and impact of the demand for oil and gas; the impact of global oil and gas commodity prices and the annual capital spending cycle for North American oil and gas producers; the global need to renew and expand critical infrastructure; the impact of changing energy demand, supply and prices; the ability of the Company to fund its operating and capital requirements; the ability of the Company to comply with its debt covenants; and the ability to finance increases in working capital.
Forward-looking information involves known and unknown risks and uncertainties that could cause actual results to differ materially from those predicted by the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information as a number of factors could cause actual events, results and prospects to differ materially from those expressed in or implied by the forward-looking information. Significant risks facing the Company include but are not limited to: the risks and uncertainties described in the Company’s Management Discussion and Analysis under “Risks and Uncertainties” and in the Company’s Annual Information Form under “Risk Factors”.
These statements of forward-looking information are based on assumptions, estimates and analysis made by management in light of its experience and perception of trends, current conditions and expected developments as well as other factors believed to be reasonable and relevant in the circumstances.
These assumptions include those in respect of the Company’s ability to manage supply chain disruptions and other business impacts caused by, among other things, current or future geopolitical events, conflicts, or disruptions, such as the conflict in Ukraine and related sanctions on Russia; the impact of the Russia and Ukraine conflict on the Company’s demand for products and the strength of its and its customers supply chains; the current escalating Israel-Palestine conflict; increased activity levels in the Connection Technologies segment; higher sales of composite pipe products into international markets; a similar level of North American onshore drilling and completion activity levels to those observed during the fourth quarter of 2023; demand for Flexpipe® products will be similar to those observed during the fourth quarter of 2023; increased shipment of Flexpipe® products to support international projects; strengthening demand within the North American industrial and infrastructure markets seasonal impacts on the Company’s FRP tanks business due to North American weather and ground conditions; the changing demand for the Company’s FRP tanks and water and stormwater storage and treatment systems; seasonal impacts to the Company’s composite pipe business due to spring break-up conditions; the trend of international sales for composite pipe products ;expected demand for the Company’s products in the Composite Technologies segment, including the ability to grow such demand over the timeline expected to complete such facilities and achieve desired operational levels; the Company being able to complete the construction and commissioning of these facilities on their expected timeline and budget, as applicable, and its ability to achieve and maintain necessary production and efficiency levels once operational; expectations regarding the Company’s ability to attract new customers and develop and maintain relationships with existing customers; the continued availability of funding required to meet the Company’s anticipated operating and capital expenditure requirements over such time; continued competitive intensity in the segments in which the Company operates consistent with levels experienced in 2023; no significant legal or regulatory developments, other shifts in economic conditions, or macro changes in the competitive environment affecting our business activities; key interest rates remaining relatively stable throughout 2024 to 2026; expectations regarding the Company’s ability to continue to manage its supply chain and any future disruptions; the increased demand for the Company’s products within the Connection Technologies markets; heightened demand for electric and hybrid vehicles and for electronic content within those vehicles; the growth in demand for water and storm water storage and treatment systems; heightened infrastructure spending in Canada, including in respect of commercial and municipal water projects, nuclear plant refurbishment and upgraded communication and transportation networks, communication networks and nuclear refurbishments; sustained health of oil and gas producers; the continued global need to renew and expand critical infrastructure including energy generation and distribution, electrification, transportation network enhancement and storm management; enhanced overall market activity; the continued recovery of the global economy; the Company’s ability to execute projects under contract; the Company’s continuing ability to provide new and enhanced product offerings to its customers; that the Company will continue to be able to optimize its portfolio and identify and successfully execute on opportunities for acquisitions or investments; the higher level of investment in working capital by the Company; the easing of supply chain shortages and the continued supply of and stable pricing or the ability to pass on higher prices to its customers for commodities used by the Company; the availability of personnel resources sufficient for the Company to operate its businesses; the maintenance of operations by the Company in major oil and gas producing regions; the adequacy of the Company’s existing accruals in respect of environmental compliance and in respect of litigation and tax matters and other claims generally; the impact of adoption of artificial intelligence and other machine learning on competition in the industries which the Company operates; the Company’s ability to meet its financial objectives; the ability of the Company to satisfy all covenants under its Credit Facility (as defined herein) and other debt obligations and having sufficient liquidity to fund its obligations and planned initiatives; the ability to develop, access or implement some or all of the technology necessary to efficiently and effectively achieve the Company’s ESG goals and ambitions, including its greenhouse gas targets; the availability, commercial viability and scalability of the Company’s greenhouse gas emission reduction strategies and related technology and products; and the anticipated costs and impacts on the Company’s operations and financial results of adopting these technologies or strategies. The Company believes that the expectations reflected in the forward-looking information are based on reasonable assumptions in light of currently available information. However, should one or more risks materialize, or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking information included in this document and the Company can give no assurance that such expectations will be achieved.
When considering the forward-looking information in making decisions with respect to the Company, readers should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not assume the obligation to revise or update forward-looking information after the date of this document or to revise it to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.
To the extent any forward-looking information in this document constitutes future oriented financial information or financial outlooks, within the meaning of securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future oriented financial information and financial outlooks, as with forward-looking information generally, are based on the assumptions and subject to the risks noted above.
5.0 RECONCILIATION OF NON-GAAP MEASURES
The Company reports on certain non-GAAP measures that are used to evaluate its performance and segments, as well as to determine compliance with debt covenants and to manage its capital structure. These non-GAAP measures do not have standardized meanings under IFRS and are not necessarily comparable to similar measures provided by other companies. The Company discloses these measures because it believes that they provide further information and assist readers in understanding the results of the Company’s operations and financial position. These measures should not be considered in isolation or used in substitution for other measures of performance prepared in accordance with GAAP. The following is a reconciliation of the non-GAAP measures reported by the Company.
EBITDA and Adjusted EBITDA
In an effort to reduce the volatility of the Adjusted EBITDA metric imposed by factors outside of the Company’s control and to provide enhanced comparability of the Company’s results from its principal business activities with those of the Company’s peer group, the Company has modified the composition of Adjusted EBITDA. Beginning in the first quarter of 2023, Adjusted EBITDA includes adjustments for share-based incentive compensation costs and foreign exchange (gains) losses. Share-based incentive compensation costs have recently experienced a high degree of volatility derived from movements in the market value of the Company’s shares and the related impact on such plans. Given the Company’s global presence and its exposure to several foreign currency rates, the Company experiences fluctuation from foreign exchange gains or losses outside of its control. The Company believes this modified composition will present a more accurate representation of the Company’s results from principal business activities. The amounts presented below reflect restated figures for prior periods as needed to align with the updated definition.
EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA is also a non-GAAP measure defined as EBITDA adjusted for items which do not impact day to day operations. Adjusted EBITDA is calculated by adding back to EBITDA the sum of impairments, costs associated with refinancing of long-term debt and credit facilities, gain on sale of land and other, gain on sale of investment in associates, gain on sale of operating unit, acquisition costs, restructuring costs, share-based incentive compensation cost, foreign exchange (gain) loss and other, net and hyperinflationary adjustments. The Company believes that EBITDA and Adjusted EBITDA are useful supplemental measures that provide a meaningful indication of the Company’s results from principal business activities prior to the consideration of how these activities are financed or the tax impacts in various jurisdictions and for comparing its operating performance with the performance of other companies that have different financing, capital or tax structures. The Company presents Adjusted EBITDA as a measure of EBITDA that excludes the impact of transactions that are outside the Company’s normal course of business or day to day operations. Adjusted EBITDA is used by many analysts as one of several important analytical tools to evaluate financial performance and is a key metric in business valuations. It is also considered important by lenders to the Company and is included in the financial covenants of the Credit Facility.
| (in thousands of Canadian dollars) | Year Ended December 31, | ||||||
| 2023 | 2022 | ||||||
| Net Income from Continuing Operations | $ | 55,859 | $ | 93,347 | |||
| Add: | |||||||
| Income tax expense (recovery) | 5,401 | (4,155 | ) | ||||
| Finance costs, net | 20,282 | 20,452 | |||||
| Amortization of property, plant, equipment, intangible and ROU assets | 36,861 | 37,628 | |||||
| EBITDA from Continuing Operations | $ | 118,403 | $ | 147,272 | |||
| Share-based incentive compensation cost | 18,307 | 26,011 | |||||
| Foreign exchange loss (gain) | 2,243 | (7,871 | ) | ||||
| Gain on sale of land and other | (1,655 | ) | (43,017 | ) | |||
| Loss on sale of Subsidiaries | – | 1,327 | |||||
| Curtailment of defined benefit plan | (1,889 | ) | – | ||||
| 2019 ZCL Composites Inc. purchase trust | – | (1,059 | ) | ||||
| Impairment | 27,195 | 9,457 | |||||
| Restructuring costs and other, net | 2,474 | 9,703 | |||||
| Adjusted EBITDA from Continuing Operations | $ | 165,078 | $ | 141,823 | |||
| Three Month Ended |
||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||
| (in thousands of Canadian dollars) | 2023 | 2023 | 2023 | 2023 | ||||||||
| Net Income from Continuing Operations | $ | 20,708 | $ | 14,670 | $ | 18,145 | $ | 2,335 | ||||
| Add: | ||||||||||||
| Income tax expense (recovery) | 4,585 | 3,327 | 2,486 | (4,997 | ) | |||||||
| Finance costs, net | 4,984 | 4,974 | 5,344 | 4,980 | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 9,021 | 9,170 | 9,785 | 8,885 | ||||||||
| EBITDA from Continuing Operations | $ | 39,298 | $ | 32,141 | $ | 35,760 | $ | 11,203 | ||||
| Share-based incentive compensation (recovery) cost | (42 | ) | 18,668 | (2,414 | ) | 2,096 | ||||||
| Foreign exchange loss (gain) | 1,210 | (45 | ) | 952 | 126 | |||||||
| Gain on sale of land and other | – | – | – | (1,655 | ) | |||||||
| Curtailment of defined benefit plan |
– | – | (1,889 | ) | – | |||||||
| Impairment | – | – | 8,652 | 18,544 | ||||||||
| Restructuring costs and other, net | – | – | – | 2,474 | ||||||||
| Adjusted EBITDA from Continuing Operations | $ | 40,466 | $ | 50,764 | $ | 41,060 | $ | 32,787 | ||||
| Three Month Ended |
||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||
| (in thousands of Canadian dollars) | 2022 | 2022 | 2022 | 2022 | ||||||||
| Net Income from Continuing Operations | $ | 10,017 | $ | 40,629 | $ | 29,211 | $ | 13,489 | ||||
| Add: | ||||||||||||
| Income tax expense (recovery) | 249 | 7,006 | (4,446 | ) | (6,963 | ) | ||||||
| Finance costs, net | 3,948 | 5,934 | 6,040 | 4,530 | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 9,464 | 9,998 | 9,102 | 9,064 | ||||||||
| EBITDA from Continuing Operations | $ | 23,678 | $ | 63,567 | $ | 39,907 | $ | 20,120 | ||||
| Share-based incentive compensation cost | 2,346 | 2,584 | 8,182 | 12,899 | ||||||||
| Foreign exchange (gain) loss | (2,625 | ) | (351 | ) | (5,664 | ) | 769 | |||||
| Gain on sale of land and other | – | (43,017 | ) | – | – | |||||||
| Loss on sale of Subsidiaries | – | – | – | 1,327 | ||||||||
| 2019 ZCL Composites Inc. purchase trust | – | – | (1,059 | ) | – | |||||||
| Impairment | – | 7,292 | – | 2,165 | ||||||||
| Restructuring costs and other, net | 1,075 | 2,420 | 2,075 | 4,133 | ||||||||
| Adjusted EBITDA from Continuing Operations | $ | 24,474 | $ | 32,495 | $ | 43,442 | $ | 41,413 | ||||
Composite Technologies Segment
| (in thousands of Canadian dollars) | Year Ended December 31, | ||||||
| 2023 | 2022 | ||||||
| Operating Income | $ | 67,416 | $ | 53,347 | |||
| Add: | |||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 27,043 | 29,758 | |||||
| EBITDA | $ | 94,459 | $ | 83,104 | |||
| Share-based incentive compensation cost | 1,812 | 4,468 | |||||
| Gain on sale of land and other | (1,995 | ) | (3,820 | ) | |||
| Impairment | 18,544 | 9,458 | |||||
| Restructuring costs and other, net | – | 4,477 | |||||
| Adjusted EBITDA | $ | 112,821 | $ | 97,687 | |||
| Three Month Ended | |||||||||||
| March 31, | June 30, | September 30, | December 31, | ||||||||
| (in thousands of Canadian dollars) | 2023 | 2023 | 2023 | 2023 | |||||||
| Operating Income (Loss) | $ | 20,722 | $ | 25,580 | $ | 25,483 | $ | (4,369 | ) | ||
| Add: | |||||||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 6,627 | 6,762 | 7,398 | 6,257 | |||||||
| EBITDA | $ | 27,349 | $ | 32,342 | $ | 32,881 | $ | 1,888 | |||
| Share-based incentive compensation (recovery) cost | (601 | ) | 2,449 | (435 | ) | 399 | |||||
| Gain on sale of land and other | – | – | – | (1,995 | ) | ||||||
| Impairment | – | – | – | 18,544 | |||||||
| Restructuring costs and other, net | – | – | – | – | |||||||
| Adjusted EBITDA | $ | 26,748 | $ | 34,791 | $ | 32,446 | $ | 18,837 | |||
| Three Month Ended | |||||||||
| March 31, | June 30, | September 30, | December 31, | ||||||
| (in thousands of Canadian dollars) | 2022 | 2022 | 2022 | 2022 | |||||
| Operating Income | $ | 6,874 | $ | 9,521 | $ | 21,747 | $ | 15,205 | |
| Add: | |||||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 7,409 | 7,910 | 7,189 | 7,250 | |||||
| EBITDA | $ | 14,283 | $ | 17,431 | $ | 28,936 | $ | 22,455 | |
| Share-based incentive compensation cost |
278 | 293 | 1,173 | 2,724 | |||||
| Gain on sale of land and other | – | (3,820 | ) | – | – | ||||
| Impairment | – | 7,293 | – | 2,164 | |||||
| Restructuring costs and other, net | 423 | 1,967 | 2,088 | – | |||||
| Adjusted EBITDA | $ | 14,984 | $ | 23,164 | $ | 32,197 | $ | 27,343 | |
Connection Technologies Segment
| (in thousands of Canadian dollars) | Year Ended December 31, | ||||
| 2023 | 2022 | ||||
| Operating Income | $ | 60,356 | $ | 55,237 | |
| Add: | |||||
| Amortization of property, plant, equipment, intangible and ROU assets | 5,752 | 4,363 | |||
| EBITDA | $ | 66,107 | $ | 59,600 | |
| Share-based incentive compensation cost | 2,649 | 3,064 | |||
| Restructuring costs and other, net | 747 | 81 | |||
| Adjusted EBITDA | $ | 69,504 | $ | 62,745 | |
| Three Month Ended | |||||||||
| March 31, | June 30, | September 30, | December 31, | ||||||
| (in thousands of Canadian dollars) | 2023 | 2023 | 2023 | 2023 | |||||
| Operating Income | $ | 17,650 | $ | 17,005 | $ | 13,910 | $ | 11,791 | |
| Add: | |||||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 1,333 | 1,349 | 1,356 | 1,713 | |||||
| EBITDA | $ | 18,983 | $ | 18,354 | $ | 15,266 | $ | 13,505 | |
| Share-based incentive compensation (recovery) cost |
26 | 2,224 | (48 | ) | 448 | ||||
| Restructuring costs and other, net | – | – | – | 747 | |||||
| Adjusted EBITDA | $ | 19,009 | $ | 20,578 | $ | 15,218 | $ | 14,699 | |
| Three Month Ended | ||||||||
| March 31, | June 30, | September 30, | December 31, | |||||
| (in thousands of Canadian dollars) | 2022 | 2022 | 2022 | 2022 | ||||
| Operating Income | $ | 14,887 | $ | 14,832 | $ | 13,915 | $ | 11,603 |
| Add: | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets | 1,085 | 1,059 | 1,076 | 1,143 | ||||
| EBITDA | $ | 15,972 | $ | 15,891 | $ | 14,991 | $ | 12,746 |
| Share-based incentive compensation cost |
209 | 270 | 820 | 1,766 | ||||
| Restructuring costs and other, net | 27 | 54 | – | – | ||||
| Adjusted EBITDA | $ | 16,208 | $ | 16,214 | $ | 15,811 | $ | 14,512 |
Discontinued Operations
| (in thousands of Canadian dollars) | Year Ended December 31, | ||||||
| 2023 | 2022 | ||||||
| Net Income (loss) from Discontinued Operations | $ | 31,360 | $ | (124,323 | ) | ||
| Add: | |||||||
| Income tax expense (recovery) | 52,660 | (15,123 | ) | ||||
| Finance costs, net | 1,247 | 1,263 | |||||
| Amortization of property, plant, equipment, intangible and ROU assets |
27,524 | 33,788 | |||||
| EBITDA from Discontinued Operations | $ | 112,791 | $ | (104,395 | ) | ||
| Share-based incentive compensation (recovery) cost | 236 | 5,480 | |||||
| Foreign exchange (gain) | (2,612 | ) | (1,842 | ) | |||
| Loss on sale of Subsidiaries | 111,004 | 83,424 | |||||
| Hyperinflation adjustment for Argentina | – | 12,774 | |||||
| Impairment | – | 12,975 | |||||
| Restructuring costs and other, net | 1,465 | 1,495 | |||||
| Adjusted EBITDA from Discontinued Operations | $ | 222,884 | $ | 9,910 | |||
| Three Month Ended | ||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||
| (in thousands of Canadian dollars) | 2023 | 2023 | 2023 | 2023 | ||||||||
| Net Income (loss) from Discontinued Operations | $ | 4,521 | $ | (1,648 | ) | $ | 53,829 | $ | (25,342 | ) | ||
| Add: | ||||||||||||
| Income tax expense | 672 | 2,831 | 23,769 | 25,388 | ||||||||
| Finance costs, net | 160 | 554 | 400 | 133 | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets |
10,209 |
10,860 |
6,480 |
(25 |
) |
|||||||
| EBITDA from Discontinued Operations | $ | 15,562 | $ | 12,596 | $ | 84,478 | $ | 157 | ||||
| Share-based incentive compensation (recovery) cost | (561 | ) | 3,296 | (498 | ) | (2,002 | ) | |||||
| Foreign exchange (gain) loss | (939 | ) | (3,120 | ) | 1,310 | 138 | ||||||
| Loss on sale of Subsidiaries | – | 3,738 | 2,089 | 105,177 | ||||||||
| Restructuring costs and other, net | – | – | – | 1,465 | ||||||||
| Adjusted EBITDA from Discontinued Operations | $ | 14,062 | $ | 16,510 | $ | 87,379 | $ | 104,933 | ||||
| Three Month Ended | ||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||
| (in thousands of Canadian dollars) | 2022 | 2022 | 2022 | 2022 | ||||||||
| Net (Loss) from Discontinued Operations | $ | (17,133 | ) | $ | (20,682 | ) | $ | (6,208 | ) | $ | (80,299 | ) |
| Add: | ||||||||||||
| Income tax expense (recovery) | 1,988 | (807 | ) | (13,919 | ) | (2,386 | ) | |||||
| Finance costs, net | 397 | 128 | 455 | 284 | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets |
8,008 |
7,485 |
7,340 |
10,955 |
||||||||
| EBITDA from Discontinued Operations | $ | (6,740 | ) | $ | (13,876 | ) | $ | (12,332 | ) | $ | (71,447 | ) |
| Share-based incentive compensation cost |
339 |
138 |
1,284 |
3,719 |
||||||||
| Foreign exchange (gain) loss | (411 | ) | (1,155 | ) | (921 | ) | 645 | |||||
| Loss on sale of Subsidiaries | – | – | 5,932 | 77,492 | ||||||||
| Hyperinflation adjustment for Argentina |
1,890 |
1,533 |
5,510 |
3,842 |
||||||||
| Impairment | – | 12,974 | – | – | ||||||||
| Restructuring costs and other, net |
131 |
576 |
(6 |
) |
794 |
|||||||
| Adjusted EBITDA from Discontinued Operations | $ | (4,790 | ) | $ | 190 | $ | (532 | ) | $ | 15,044 | ||
Total Consolidated Mattr (Continuing and Discontinued Operations)
| Year Ended December 31, | |||||||
| (in thousands of Canadian dollars) | 2023 | 2022 | |||||
| Total Consolidated Mattr Net Income (loss) | $ | 87,219 | $ | (30,976 | ) | ||
| Add: | |||||||
| Income tax expense (recovery) | 58,061 | (19,278 | ) | ||||
| Finance costs, net | 21,529 | 21,715 | |||||
| Amortization of property, plant, equipment, intangible and ROU assets |
64,385 |
71,416 |
|||||
| Total Consolidated Mattr EBITDA | $ | 231,195 | $ | 42,876 | |||
| Share-based incentive compensation cost | 18,541 | 31,488 | |||||
| Foreign exchange (gain) | (369 | ) | (9,712 | ) | |||
| Gain on sale of land and other | (1,655 | ) | (43,017 | ) | |||
| Loss on sale of Subsidiaries | 111,004 | 84,751 | |||||
| Curtailment of defined benefit plan | (1,889 | ) | – | ||||
| 2019 ZCL Composites Inc. purchase trust | – | (1,059 | ) | ||||
| Hyperinflation adjustment for Argentina | – | 12,774 | |||||
| Impairment | 27,197 | 22,433 | |||||
| Restructuring costs and other, net | 3,938 | 11,199 | |||||
| Total Consolidated Mattr Adjusted EBITDA | $ | 387,962 | $ | 151,733 | |||
| Three Month Ended | ||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||
| (in thousands of Canadian dollars) | 2023 | 2023 | 2023 | 2023 | ||||||||
| Total Consolidated Mattr Net Income (Loss) | $ | 25,229 | $ | 13,023 | $ | 71,974 | $ | (23,006 | ) | |||
| Add: | ||||||||||||
| Income tax expense | 5,257 | 6,158 | 26,255 | 20,391 | ||||||||
| Finance costs, net | 5,144 | 5,528 | 5,744 | 5,113 | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets |
19,230 | 20,030 | 16,265 | 8,859 | ||||||||
| Total Consolidated Mattr EBITDA | $ | 54,860 | $ | 44,737 | $ | 120,238 | $ | 11,357 | ||||
| Share-based incentive compensation (recovery) cost |
(603 | ) | 21,963 | (2,912 | ) | 94 | ||||||
| Foreign exchange loss (gain) | 271 | (3,165 | ) | 2,262 | 263 | |||||||
| Gain on sale of land and other | – | – | – | (1,655 | ) | |||||||
| Loss on sale of Subsidiaries | – | 3,738 | 2,089 | 105,178 | ||||||||
| Curtailment of defined benefit plan | – | – | (1,889 | ) | – | |||||||
| Impairment | – | – | 8,652 | 18,544 | ||||||||
| Restructuring costs and other, net | – | – | – | 3,938 | ||||||||
| Total Consolidated Mattr Adjusted EBITDA | $ | 54,528 | $ | 67,274 | $ | 128,440 | $ | 137,720 | ||||
| Three Month Ended | ||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||
| (in thousands of Canadian dollars) | 2022 | 2022 | 2022 | 2022 | ||||||||
| Total Consolidated Mattr Net (Loss) Income | $ | (7,117 | ) | $ | 19,947 | $ | 23,003 | $ | (66,810 | ) | ||
| Add: | ||||||||||||
| Income tax expense (recovery) | 2,237 | 6,199 | (18,365 | ) | (9,349 | ) | ||||||
| Finance costs, net | 4,345 | 6,062 | 6,495 | 4,813 | ||||||||
| Amortization of property, plant, equipment, intangible and ROU assets |
17,472 | 17,483 | 16,442 | 20,019 | ||||||||
| Total Consolidated Mattr EBITDA | $ | 16,937 | $ | 49,691 | $ | 27,575 | $ | (51,327 | ) | |||
| Share-based incentive compensation cost | 2,685 | 2,722 | 9,466 | 16,616 | ||||||||
| Foreign exchange (gain) loss | (3,036 | ) | (1,506 | ) | (6,585 | ) | 1,414 | |||||
| Gain on sale of land and other | – | (43,017 | ) | – | – | |||||||
| Loss on sale of Subsidiaries | – | – | 5,932 | 78,819 | ||||||||
| Hyperinflation adjustment for Argentina | 1,889 | 1,531 | 5,510 | 3,843 | ||||||||
| 2019 ZCL Composites Inc. purchase trust | – | – | (1,059 | ) | – | |||||||
| Impairment | – | 20,269 | – | 2,164 | ||||||||
| Restructuring costs and other, net | 1,206 | 2,996 | 2,070 | 4,927 | ||||||||
| Total Consolidated Mattr Adjusted EBITDA | $ | 19,681 | $ | 32,686 | $ | 42,908 | $ | 56,457 | ||||
Adjusted EBITDA Margin
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue and is a non-GAAP measure. The Company believes that Adjusted EBITDA margin is a useful supplemental measure that provides meaningful assessment of the business results of the Company and its Operating Segments from principal business activities excluding the impact of transactions that are outside of the Company’s normal course of business.
See reconciliation above for the changes in composition of Adjusted EBITDA, as a result of which the applicable tables reflect restated figures for the prior year quarter to align with current presentation.
Operating Margin
Operating margin is defined as operating (loss) income divided by revenue and is a non-GAAP measure. The Company believes that operating margin is a useful supplemental measure that provides meaningful assessment of the business performance of the Company and its Operating Segments. The Company uses this measure as a key indicator of financial performance, operating efficiency and cost control based on volume of business generated.
Adjusted Net Income (attributable to shareholders)
Adjusted Net Income (attributable to shareholders) is a non-GAAP measure defined as Net Income (attributable to shareholders) adjusted for items which do not impact day to day operations. Adjusted Net Income (attributable to shareholders) is calculated by adding back to Net Income (attributable to shareholders) the after tax impact of the sum of impairments, costs associated with repayment of long-term debt and credit facilities, gain on sale of land and other, gain on sale of investment in associates, gain on sale of operating unit, acquisition costs, restructuring costs, share-based incentive compensation cost, foreign exchange (gain) loss and other, net and hyperinflationary adjustments. The Company believes that Adjusted Net Income (attributable to shareholders) is a useful supplemental measure that provides a meaningful indication of the Company’s results from principal business activities for comparing its operating performance with the performance of other companies that have different financing, capital or tax structures.
Adjusted Earnings Per Share (“Adjusted EPS”)
Adjusted EPS (basic) is a non-GAAP measure defined as Adjusted Net Income (attributable to shareholders) divided by the number of common shares outstanding. Adjusted EPS (diluted) is a non-GAAP measure defined as Adjusted Net Income (attributable to shareholders) divided by the number of common shares outstanding, further adjusted for potential dilutive impacts of outstanding securities which are convertible to common shares. The Company presents Adjusted EPS as a measure of Earning Per Share (“EPS”) that excludes the impact of transactions that are outside the Company’s normal course of business or day to day operations. Adjusted EPS indicates the amount of Adjusted Net Income the Company makes for each share of its stock and is used by many analysts as one of several important analytical tools to evaluate financial performance and is a key metric in business valuations.
Total Consolidated Mattr Adjusted EPS (Continuing and Discontinued Operations)
|
(in thousands of Canadian dollars except for per share amounts) |
Year Ended |
|||||||||||
| December 31, | December 31, 2022 |
|||||||||||
| 2023 | ||||||||||||
| Earnings Per Share | Earnings Per Share | |||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||
| Total Consolidated Mattr Net Income (Loss) (a) | $ | 87,187 | 1.26 | 1.25 | $ | (29,989 | ) | (0.43 | ) | (0.43 | ) | |
| Adjustments (before tax): | ||||||||||||
| Share-based incentive compensation cost |
18,542 | 31,489 | ||||||||||
| Foreign exchange (gain) loss | (369 | ) | (9,712 | ) | ||||||||
| Gain on sale of land and other | (1,655 | ) | (43,017 | ) | ||||||||
| Loss on sale of Subsidiaries | 111,004 | 84,751 | ||||||||||
| Hyperinflation adjustment for Argentina |
– | 12,776 | ||||||||||
| Curtailment of defined benefit plan |
(1,889 | ) | – | |||||||||
| Impairment | 27,197 | 22,433 | ||||||||||
| Restructuring costs and other, net | 3,938 | 11,199 | ||||||||||
| Tax effect of above adjustments | (4,300 | ) | (8,787 | ) | ||||||||
| Adjusted Net Income (non-GAAP) (a) | 239,655 | 3.46 | 3.43 | 71,143 | 1.01 | 1.01 | ||||||
| (a) attributable to Shareholders of the Company | ||||||||||||
| (in thousands of Canadian dollars except for per share amounts) | Three Months Ended |
|||||||||||||
| December 31, | December 31, | |||||||||||||
| 2023 | 2022 | |||||||||||||
| Earnings Per Share | Earnings Per Share | |||||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||||
| Total Consolidated Mattr Net (Loss) (a) | $ | (23,022 | ) | (0.34 | ) | (0.34 | ) | $ | (66,413 | ) | (0.94 | ) | (0.94 | ) |
| Adjustments (before tax): | ||||||||||||||
| Share-based incentive compensation cost |
94 | 16,618 | ||||||||||||
| Foreign exchange (gain) loss | 263 | 1,414 | ||||||||||||
| Gain on sale of land and other | (1,655 | ) | – | |||||||||||
| Loss on sale of Subsidiaries | 105,178 | 78,819 | ||||||||||||
| Hyperinflation adjustment for Argentina |
– | 3,843 | ||||||||||||
| Curtailment of defined benefit plan | – | – | ||||||||||||
| Impairment | 18,544 | 2,164 | ||||||||||||
| Restructuring costs and other, net | 3,939 | 4,927 | ||||||||||||
| Tax effect of above adjustments | (464 | ) | (10,625 | ) | ||||||||||
| Adjusted Net Income (non-GAAP) (a) | 102,877 | 1.52 | 1.51 | 30,746 | 0.44 | 0.43 | ||||||||
| (a) attributable to Shareholders of the Company | ||||||||||||||
Total Net debt-to-Adjusted EBITDA
Total Net debt-to-Adjusted EBITDA is a non-GAAP measure defined as the sum of long-term debt, current lease liabilities and long-term lease liabilities, less cash and cash equivalents, divided by the Consolidated (Continuing and Discontinued Operations) Adjusted EBITDA, as defined above, for the trailing twelve-month period. The Company believes Total Net debt-to-Adjusted EBITDA is a useful supplementary measure to assess the borrowing capacity of the Company. Total Net debt-to-Adjusted EBITDA is used by many analysts as one of several important analytical tools to evaluate how long a company would need to operate at its current level to pay of all its debt. It is also considered important by credit rating agencies to determine the probability of a company defaulting on its debt.
See discussion above for the changes into the composition of Adjusted EBITDA. The table below reflects restated figures for the prior year quarters to align with current presentation.
| (in thousands of Canadian dollars except Net debt-to-EBITDA ratio) | 2023 | 2022 | |||||
| Long-term debt | $ | 144,201 | $ | 210,832 | |||
| Lease liabilities | 88,263 | 59,439 | |||||
| Cash and Cash equivalents | (334,061 | ) | (263,990 | ) | |||
| Total Net Debt | $ | (101,597 | ) | $ | 6,281 | ||
| Q1 2022 Adjusted EBITDA | $ | – | $ | 19,682 | |||
| Q2 2022 Adjusted EBITDA | – | 32,688 | |||||
| Q3 2022 Adjusted EBITDA | – | 42,908 | |||||
| Q4 2022 Adjusted EBITDA | – | 56,458 | |||||
| Q1 2023 Adjusted EBITDA | 54,528 | – | |||||
| Q2 2023 Adjusted EBITDA | 67,274 | – | |||||
| Q3 2023 Adjusted EBITDA | 128,440 | – | |||||
| Q4 2023 Adjusted EBITDA | 137,721 | – | |||||
| Trailing twelve-month Adjusted EBITDA | $ | 387,963 | $ | 151,736 | |||
| Total Net debt-to-Adjusted EBITDA | (0.26 | ) | 0.04 | ||||
Total Interest Coverage Ratio
Total Interest Coverage Ratio is a non-GAAP measure defined as Consolidated Adjusted EBITDA (Continuing and Discontinued Operations), as defined above, for the trailing twelve-month period, divided by finance costs, net, for the trailing twelve-month period. The Company believes Total Interest Coverage Ratio is a useful supplementary measure to assess the Company’s ability to honor its debt payments. Total Interest Coverage Ratio is used by many analysts as one of several important analytical tools to judge a company’s ability to pay interest on its outstanding debt. It is also considered important by credit rating agencies to determine a company’s riskiness relative to its current debt or for future borrowing.
| (in thousands of Canadian dollars except Interest Coverage ratio) | 2023 | 2022 | |||
| Q1 2022 Adjusted EBITDA | $ | – | $ | 19,682 | |
| Q2 2022 Adjusted EBITDA | – | 32,688 | |||
| Q3 2022 Adjusted EBITDA | – | 42,908 | |||
| Q4 2022 Adjusted EBITDA | – | 56,458 | |||
| Q1 2023 Adjusted EBITDA | 54,528 | – | |||
| Q2 2023 Adjusted EBITDA | 67,274 | – | |||
| Q3 2023 Adjusted EBITDA | 128,440 | – | |||
| Q4 2023 Adjusted EBITDA | 137,721 | – | |||
| Trailing twelve-month Adjusted EBITDA | $ | 387,963 | $ | 151,736 | |
| Q1 2022 Finance costs, net | $ | – | $ | 4,345 | |
| Q2 2022 Finance costs, net | – | 6,062 | |||
| Q3 2022 Finance costs, net | – | 6,495 | |||
| Q4 2022 Finance costs, net | – | 4,813 | |||
| Q1 2023 Finance costs, net | 5,144 | – | |||
| Q2 2023 Finance costs, net | 5,528 | – | |||
| Q3 2023 Finance costs, net | 5,744 | – | |||
| Q4 2023 Finance costs, net | 5,113 | – | |||
| Trailing twelve-month finance cost, net | $ | 21,529 | $ | 21,715 | |
| Total Interest Coverage Ratio | 18.02 | 6.99 |
Order Backlog and Bid and Budgetary Estimates
The PPG business, which has historically comprised the vast majority of the Company’s bid and budgetary estimates and total order backlog, was sold in November 2023 and as a result the Company will no longer report these supplementary financial measures as the Company does not believe that going forward such measures will provide investors with useful information to understand or evaluate the Company’s Continuing Operations or their respective performance and prospects.
6.0 Additional Information
Additional information relating to the Company, including its AIF, is available on SEDAR+ at www. sedarplus.com and on the “Investors Centre” page of the Company’s website at: https://investors.Mattr.com/Investor-Center/default.aspx.
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